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Medicine and Social Justice will have periodic postings of my comments on issues related to, well, Medicine, and Social Justice, and Medicine and Social Justice. It will also look at Health, Workforce, health systems, and some national and global priorities

Sunday, February 2, 2014

Health care systems should not be run for profit, but rather for people's health

I wrote in a recent blog (“How can a health
care system lead not to ruin but to, actually, health?”, December 28, 2013) that our health care system ”…is a parallel to our financial services
industry: private enterprise is given a license to make money from everyone,
and the government finances it. The only difference is that for financial
services, the government steps in to bail them out only after they have already
stolen all our money, while in health services the profit margin is built in
from the start.” A recent article in the New York Times, “Hospital chain said to scheme to inflate bills”, by Julie Creswell and Reed Abelson (January 24, 2014)
takes this a bit farther.

Discussing the Department of Justice’s decision to join several
whistleblower (“qui tam”) lawsuits
against the for-profit hospital chain HMA (not to be confused with the nation’s
largest, HCA) for aggressive policies that seek to maximize profits by
“encouraging” (at threat of termination) doctors to over-admit patients, they
quote Sheryl R. Skolnick from CRT Capital, who wrote “Investors seem to think that D.O.J. investigations, qui tam suits and
allegations of serious Medicare fraud are simply a cost of doing business.” That’s
right. Illegal activity has a price – fines – but the fines are small enough
that they do not discourage the illegal activity. The authors write “Many settlements run only into the tens of
millions of dollars. That’s a corporate slap on the wrist for companies whose
stocks typically soar when executives push the profit envelope. Only if the
penalty is at least $500 million, Ms. Skolnick said, are corporations likely to
find the cost a deterrent.” Or, of course, if the heads of these
corporations are sent to prison, but in another parallel with the financial
services industry, this is not happening. Not to Lloyd Blankfein of Goldman
Sachs or other financial titans (such as CEO Jamie Dimon of JPMorgan, featured
in the same issue of the Times, “JPMorgan, fined billions,
approves raise for its chief”!), or to Rick Scott, former head of Columbia/HCA when it was fined $1.7 billion in 2003 for massive Medicare fraud). Scott, of course, is now the Governor of Florida.

It is difficult to imagine the hubris and arrogance of the
“masters of the universe” who run the financial services industry, or the large
hospital corporations. At least, it is for me, and possibly for other people
who believe that the health care system should be first, second, third, and
last about benefiting people’s health. It does not seem to be for the C-suite
executives of even moderate-sized hospitals, who often come from accounting and
finance backgrounds. The argument is that if there is “no margin” there is “no
mission”, and that in the competitive environment of health care it is
necessary to have good business managers to make it possible for a hospital –
or hospital system – to even survive, not to mention to prosper.

Good management is important. Good management means the ability
to run an organization efficiently, to create effective systems and effective
working relationships, to enhance quality and limit unnecessary costs. It is
absolutely necessary to build a system that is about benefiting the health of
people. This includes financial knowledge and financial management ability. But
increasing profit, increasing market share, taking “desirable” customers away
from “competitors” has no such place; the health system has no business in
being organized in such a way that these things are even possible.

This statement is so completely at odds with the way the health
system is currently structured that it bears repeating. There should be no
financial incentive for competition in health care. There should not be more
services available than a community needs because every hospital wants to
provide it and take “customers” from their competitors. If, for example, a
community is large enough that it needs one MRI scanner, there should be only
one (or 2, or 3, or whatever the medical need is). In the current structure,
however, the hospital with that one would have a competitive advantage over
other hospitals in the community, so everyone needs one. The same is true for
any profitable service: cancer treatment, heart procedures, neurosurgical
procedures, etc. Profitable “product lines” are, thus, in oversupply, and this means
that they are overused, often with risk to the recipients, and certainly the
cost to everyone is increased. Conversely, necessary services that are not profitable, such as burn and trauma
care, are rarely in oversupply, frequently relegated to the community’s public
hospital, and sometimes not available at all.

A community should have all the health care resources its people
need, but should not duplicate – and triplicate – services so each can compete.
It is bad in terms of the overall cost, and the oversupply of profitable
services, and it is arguably worse in that all these hospitals are competing to
get the same patients – those who are well-insured with “high profit” diseases,
and to not care for others – uninsured, poor, and those needing services that
are not well reimbursed.

This is craziness. Health care is not luxury condominiums, or
expensive watches. It is something that every single person should get all of
that they need, and no one should get what they do not need. There should be
competition between hospitals to be excellent, and measures of excellence
should include comprehensiveness, quality, cost-effectiveness, and caring for
everyone equitably (not equally, but based upon their health care needs). And,
if there are to be financial rewards, they should come for doing this well.
There must be no services that are particularly “high-profit”, nor patients
whose economic status makes them “undesirable”.

We have a long way to go. Various strategies have been tried in
the past, from certificate of need (CON) programs that decided whether a
community needed a new pieceof capital equipment in the 1970s and 1980s, to
disproportionate share funding for hospital caring for higher percentages of
uninsured people and quality improvement organizations more recently. But all of
these efforts have been gamed, because there was no comprehensive plan in place
to ensure that no patient, and no disease, was more or less profitable than
another. We need to have a system in which each person with a health care
problem is provided the care that they need. No gold cards. No profitable
conditions. Not hard to understand.